By Rhiannon Hoyle

 

BHP Group Ltd. said it will likely produce less copper and nickel this fiscal year than previously anticipated, but stuck to its production goal for iron ore despite setbacks from a tight labor market.

The world's largest miner by market value on Thursday said it now expects to produce 1.57 million-1.62 million metric tons of copper in the year through June, down from an earlier estimate of 1.59 million-1.76 million tons.

The downgrade reflects lowered production guidance for the Escondida mine, where output fell sharply last quarter as Covid-19 infections reduced its available workforce and public road blockades affected access to the site for both workers and supplies.

BHP has a majority stake in Escondida, the world's largest copper mine.

The miner said it produced 369,700 tons of copper during its fiscal third quarter, up 1% quarter-on-quarter but down 6% on the year-earlier period.

BHP also cut a full-year production estimate for its nickel business, to 80,000-85,000 tons from 85,000-95,000 tons. Again, it cited labor challenges in part due to workers isolating because of Covid-19.

The company said third-quarter nickel output totaled 18,700 tons, down 13% quarter-on-quarter and 8% on the year-earlier period.

BHP said its iron ore operations also faced setbacks, but the company kept its full-year target unchanged at 249 million-259 million tons.

"Our WA [Western Australia] iron ore business continues to perform strongly as we navigate the state's first major Covid-19 wave, and we remain on track to achieve full year volume and cost guidance," said Chief Executive Mike Henry.

The miner said it produced 59.7 million tons of iron ore during the three months through March. That was up 1% on a year ago but down 10% quarter-on-quarter.

Covid-19 infections affected labor availability at its pits, while the miner also grappled with a shortage of train drivers, it said.

BHP said its production of metallurgical coal was stronger because of lesser rainfall than the prior period and improved truck productivity. Quarterly output of that commodity climbed to 10.6 million tons, up 10% on the year-earlier period and 20% on the quarter immediately prior.

BHP kept its full-year estimate unchanged at 38 million-41 million tons.

Mr. Henry highlighted heightened market volatility and rising inflation pressures following Russia's invasion of Ukraine. BHP will seek to mitigate pressures by keeping a sharp focus on operational reliability and cost discipline, he said.

"While we expect conditions to improve during the course of the 2023 calendar year, we anticipate the skills shortages and overall labor market tightness in Australia and Chile to continue in the period ahead," Mr. Henry said.

 

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

 

(END) Dow Jones Newswires

April 20, 2022 19:49 ET (23:49 GMT)

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